Although, in Nigeria, it is common knowledge that the economy is
substantially dependent and more dedicated to exploration of oil
than it is to gas, several deposits of gas have been discovered
around oil wells in Nigeria but because of the past failure of the
government to focus and explore the many other natural resources
which the country possesses, the gas industry has been practically
frustrated and nearly abandoned over the years. Thus, leading to a
loss of revenue in a sector where there is a likelihood of
otherwise generating more revenue. It is however worthy to note
that whilst statistics may not be accurate, the quantity of gas
flared in Nigeria exceeds over 40% of the gas flared annually
across Africa, which amounts to about $7billion in waste. Apart
from economic waste being a consequence of gas flaring, flared gas
is also known to contain toxic substances which cause respiratory
diseases and air pollution, leading to depletion of the ozone
layer, ultimately having an adverse effect on weather and
climate.

Whilst many countries across the world have taken advantage of
the economic benefits which flared gas may present, through its
re-injection into the fields or conversion into liquefied natural
gas, domestic cooking gas, plastic production and other uses, the
problem of gas flaring has remained unresolved in Nigeria for many
decades.

The first regulatory framework aimed at promoting antigas
flaring policies in Nigeria was the Associated Gas Reinjection Act,
1979. The Act required every oil and gas producing company in
Nigeria to submit to the minister for petroleum, detailed
programmes in relation to the re-injection of produced associated
gas or programmes for the use of produced associated gas. The Act
further provided for the deadline for gas flaring in Nigeria as
stipulated by the Federal Government to be 31 December 1974. This
deadline has however been extended a number of times between 1974
through a succession of bills and amendments of laws and the final
deadline remains uncertain as of date. Through the applicable laws
over the years, the law has always provided for application for
permits to be granted by the Minister provided the applicant pays
the amount prescribed by the Minister, without providing for strict
measures to ensure its effectiveness.

If indeed, it is correct that the country losses so much in
revenue as a result of gas flaring, the question that comes to mind
is why gas flaring has not been eradicated? Some argue it is as a
result of lack of political will on the part of the government.
Others believe it is as a result of the unavailability of the
infrastructure required to control gas flaring. There are some who
may also suggest there is no available market for domestic gas
products and the low price of gas is discouraging. Whatever the
case may be, the focal point is that an end to gas flaring is
achievable as evidenced in countries like Netherlands and Norway
which have gas-flaring policies that are worthy of emulation. In
Norway for example, the Norwegian Petroleum Directorate which is a
department within the petroleum ministry, is dedicated to
supervising petroleum activities, gas flaring and air emissions.
Furthermore, every company applying for a gas flaring permit in
Norway is required to identify the measures it has put in place to
ensure that the effect of gas flaring on environmental pollution is
minimal.

Legal Framework

The current Petroleum Industry Bill (2012), which has been in
the pipeline for a number of years, just like several other
attempts in the past, seeks to address the issue of gas flaring. In
particular, a development in the Bill are provisions for gas
flaring measurement, a specified number of days for which a permit
would be issued to an applicant and the requirement for a gas
flaring plan to be submitted by all oil and gas operating
companies. Whether the Petroleum Industry Bill will be passed into
law in the nearest future is however the subject of discussion for
another day. In particular, putting in place effective measures to
ensure that the laws on gas flaring are properly implemented is
essential.

Investment Prospects

Energy experts project that the economic strength in gas will
exceed that of oil by 2015. Therefore, the Federal Government in a
bid to boost the gas sector has set up the Gas Master Plan. The Gas
Master Plan is a strategic framework towards achieving a wholly
competitive market driven domestic gas sector and for the
implementation of gas grid infrastructures amongst others. Based on
the recent level of commitment expressed by the Federal Government
in the sale of power generation and distribution companies to
private investors, the implementation of the Gas Master- Plan
therefore, becomes critical to the Federal Government's short
and medium term strategies for power generation. If this same
attitude is shown in respect of the Gas Master Plan, the ripple
effect will create enormous potential opportunities for investors
in the gas sector.

Nigeria, no doubt, is in the spotlight as an emerging market and
it is expected that the sale of the generation companies and
distribution firms by the Federal Government to private investors
would create room for more investors to participate in the power
sector. The continuous divestment of oil and gas assets in the
upstream sector by International Oil Companies also contributes to
the surge in the investment in the oil and gas industry with both
indigenous and foreign participants having a fair share of these
opportunities. If for over 40 years, Nigerians were taking energy
for granted, that situation no longer exists! The importance of
energy and power in Nigeria can no longer be over-emphasised. The
quantity of natural gas lost to gas flaring could have been
utilised as a potent source of energy in light of the increasing
demand for electricity and pressing need for more power generation
capacity in Nigeria. To this end, gas fired power plant is a
veritable alternative. Investment opportunities also present
themselves with respect to transportation of gas from the well or
construction of gas pipelines for delivery of gas to power plants.
One major investment opportunity created by the Gas Master Plan is
the Federal Government's domestic gas obligations placed on oil
and gas operators to attain a minimum threshold of gas reserves and
production for the domestic market before same is made available
for exportation. Investors can leverage on the huge consumer market
(driven by an increasing middle class population) opportunities and
gas consumption potentials in Nigeria and also the West Africa
sub-region.

Concluding Remarks

This is the set time for the government and oil and gas
operators to show greater commitment to ensuring that gas flaring
is brought to a minimal level. The World Bank proposal urging
producers of oil and gas to stop gas flaring by 2030 is achievable
and to achieve this, there should be a well-co-ordinated alliance
between the government and various energy sub-sectors to ensure
compliance with protocols on gas flaring to achieve maximum
utilisation of natural gas. Firm commitment from the government is
required to encourage gas utilisation and flaring reduction with
petroleum companies through introduction of fiscal incentives.
Whilst gas flaring reduction requires substantial investments,
flared natural gas can be converted into lucrative investments
which will ultimately lead to a safer, conducive and healthier
environment compared to the current situation which obtains in
Nigeria especially in the Niger- Delta region of the country.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

With the continued procrastination in passing the Petroleum Industry Bill and the consequent delay in bringing about the much vaunted reforms of the oil and gas sector in Nigeria, other African countries ...

This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).

Email Address

Company Name

Password

Confirm Password

Position

Mondaq Topics -- Select your Interests

Accounting

Anti-trust

Commercial

Compliance

Consumer

Criminal

Employment

Energy

Environment

Family

Finance

Government

Healthcare

Immigration

Insolvency

Insurance

International

IP

Law Performance

Law Practice

Litigation

Media & IT

Privacy

Real Estate

Strategy

Tax

Technology

Transport

Wealth Mgt

Regions

Africa

Asia

Asia Pacific

Australasia

Canada

Caribbean

Europe

European Union

Latin America

Middle East

U.K.

United States

Worldwide Updates

Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.

To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access

No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq

No, please do not send me promotional communications from Mondaq

Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions